A veto that rebuffs consumers - Bill Clinton's veto of product-liability reform bill - Editorial

Nation's Business, July, 1996

Special-interest pressure and 'Yaw political considerations in the White House" prompted President Clinton's veto of legislation to bring long-needed reform to the nation's product-liability laws, says a key sponsor of the measure.

That comment was made by a respected member of the president's own party--Sen. Jay Rockefeller of West Virginia.

Clinton's veto was not only a repudiation of Rockefeller and other Democrats who had supported the legislation; it was also a cave-in to the trial lawyers' lobby, whose members have profited mightily from the existing laws at the expense of consumers generally.

That lobby, one of Clinton's most generous campaign contributors, was powerful enough to turn back the vast popular support for liability reform that was reflected in bipartisan congressional approval of the measure. It passed the Senate 5940 and the House 259-158.

A strong majority of 258 House members voted to override the Clinton veto, while only 163 supported it. The former number, however, fell just 23 votes short of the two-thirds majority needed for an override.

In accommodating a powerful special interest, Clinton rebuffed the concerns of a far larger and more politically potent group, American consumers.

The bill's broad significance was detailed in its own "findings" section. Because of "excessive, unpredictable, and often arbitrary damage awards and unfair allocation of liability," the section stated, "consumers have been adversely affected through withdrawal of products, services, and service providers from the marketplace and [by] excessively high costs passed on to them." A major failing of the present system, the measure explained, is its tangled arrangement; each state has its own product-liability laws, "resulting in a complex, contradictory, and uncertain regime that is inequitable to both plaintiffs and defendants."

The bill submitted to the president offered common-sense solutions to the existing problems while preserving the rights of individuals to press legitimate claims.

The trial lawyers-- and Clinton--claimed that the measure would have protected companies from having to answer for defective products.

The lawyers' concern for plaintiffs' rights is more understandable when placed in the context of who gets what in liability suits: The General Accounting Office points out that more than half the money collected by plaintiffs goes to attorneys. And it is punitive damages that provide them with multimillion-dollar bonanzas.

The business stake in this issue was described forcefully by R. Bruce Josten, senior vice president for membership policy of the U.S. Chamber of Commerce, which has been in the forefront of the 18-year battle for liability reform: "Many businesses, particularly small companies, live in daily fear that they are one lawsuit away from extinction."

Every firm forced to commit resources to defending itself against a frivolous liability action "is that much less able to grow, create jobs, bring new products to market, and contribute to the economy," Josten added.

Rep. Henry J. Hyde, R-Ill., chairman of the House Judiciary Committee and floor manager for the bill, said that while "the American public wants and deserves reform of our current out-of-control legal system," the Clinton veto means continuance of the status quo, "costing consumers dearly."

While one battle has been lost, the issue will remain very much alive as support for reform continues to grow among the public and in Congress. The Clinton veto may well prove to be the last gasp of the opposition to the inevitable change in a system badly in need of change.